China's Xi Jinping in Hungary to discuss Ukraine, infrastructure

Chinese President Xi Jinping is due to meet Hungarian Prime Minister Viktor Orban on Thursday, with the war in Ukraine and infrastructure projects high on the agenda, as he makes his third stop on his first European tour in five years.

Xi, who arrived in Budapest late on Wednesday, can expect a warm welcome in a country that is an important partner in trade and investment, in contrast with other EU nations that are considering diversifying from China and becoming less dependent on the world’s second-largest economy.

Xi Jinping has “developed deep friendships” with Hungarian politicians and Hungary was “the number one target in the central eastern European region for Chinese investment”, Xi wrote in pro-government daily Magyar Nemzet on Wednesday.

Xi Jinping arrived in Hungary after visiting France and Serbia. In Paris, President Emmanuel Macron and EU Commission chief Ursula von der Leyen pressed him to ensure more balanced trade with Europe and use his influence on Russia to end the war in Ukraine.

Ukraine will be high on the agenda during the talks in Budapest as well, Foreign Minister Peter Szijjarto said at a briefing earlier in the week.

Hungary and China, which mark their 75th year of diplomatic relations, are also expected to sign 16 to 18 new cooperation agreements, one of which could be a large-scale infrastructure project within China’s huge Belt and Road project, the minister added.

Similarly to Serbia, Hungary is a supporter of China’s Belt and Road Initiative, an ambitious plan launched by Xi Jinping a decade ago in the hope of building global infrastructure and energy networks connecting Asia with Africa and Europe.

The relationship goes beyond trade and investment as China offered cooperation on public security and law enforcement issues to Hungary in February.

Orban started working on bringing his country closer to Beijing right after he came into power in 2010. Warm political relations turned into investments about a decade later when battery and electric vehicle makers started to bring production to Hungary.

One of the biggest investors, CATL, is building a 7.3 billion euro ($7.86 billion) battery plant in Debrecen while Chinese EV maker BYD announced late last year that it was building its first European plant in southern Szeged.

China brought battery production into Europe first to save on shipping costs, as they were so heavy that it made sense to move production next to car factories of companies such as Daimler and BMW, Tamas Matura, assistant professor at Corvinus University, said.

The next step is producing Chinese electric vehicles in Hungary as the EU’s protectionist plans are threatening their expansion more and more, he added.

“These could affect them much less if they are already established and produce inside the EU.”